US Bank Wealth Management CIO Eric Freedman argues that inflation and dwindling savings will continue to weigh on consumers as “we get into the deeper part of summer” and could prompt more people to return to the workforce.
The Labor Department’s monthly jobs report, due out on Friday, is likely to show that US employers hired fewer workers last month than they did in May, and economists say the slowdown could serve as the latest hint of a recession.
Economists polled by Refinitiv predicted the report would show 268,000 nonfarm payrolls added in June, the slowest reading in over a year and down from 390,000 a month earlier.
A man walks past a Hiring Now sign outside a restaurant in Arlington, Virginia, on June 3, 2022. (Photo by OLIVIER DOULIERY/AFP via Getty Images/Getty Images)
The job market is expected to cool – along with the broader economy – as the Federal Reserve continues its campaign of raising interest rates to combat raging inflation, which is at a 40-year high.
JOB OFFERS REMAIN AT RECORD LEVELS
But there are growing concerns that the central bank could go too far in slowing demand and plunge the US into a recession marked by two consecutive quarters of negative gross domestic product growth.
Some analysts are pointing to signs that a recession is already looming: last week the Federal Reserve Bank of Atlanta lowered its GDP forecast for the second quarter to -2.1%.
The Federal Reserve Building in Washington, DC ((AP Photo/Patrick Semansky, file) / Associated Press)
The real-time economic indicator known as GDPNOw isn’t an official estimate of growth for the quarter ending June, but if upcoming Bureau of Labor Statistics readings confirm the economy contracted in the second quarter, the technical criteria for a recession will be in place .
POWELL SAYS THERE IS “NO GUARANTEE” THE FED CAN PUMP INFLATION WITHOUT HARMING THE JOB MARKET
The National Bureau of Economic Research (NBER) will make the final decision on whether the economy has entered a recession, which the agency says is characterized by high unemployment, low or negative GDP growth, falling incomes and slowing retail sales.
A We’re Hiring sign in front of a Walmart store in Torrance, California, on Sunday, May 15, 2022. (Bing Guan/Bloomberg via Getty Images/Getty Images)
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Initial jobless claims rose to a six-month high of 235k last week, ahead of the estimate of 230k and signaling the job market remains tight but demand for labor is cooling.
Megan Henney of FOX Business contributed to this report.